Jewel In The Textile Industry

he Yulon Group, Taiwan, consists of three divisions: Yulon Motor Corp.; China Motor
Corp.; and Tai Yuen Textile Co. Ltd. The group has a combined registered capital of more than
US$700 million and a turnover of US$9.5 billion, and employs 20,000 people.

Founded in 1951, Tai Yuen Textile was in fact the group’s original parent company. Today,
the company employs 1,500 workers and has a turnover of US$100 million. A net profit in 2005 of
US$85 million makes Tai Yuen the most profitable — in terms of percent turnover — of Taiwan’s top
1,000 manufacturers. Tai Yuen has a total installed capacity for open-end and ring-spun yarns of
approximately 4 million pounds per month, and remains strongly committed to the textile industry.
Its main market is the United States.

According to Tai Yuen’s President Wei Kung Chi, it is practically impossible for Taiwan’s
textile industry to compete with Pakistan, India and China in standard textile products. Some of
the main reasons cited are Taiwan’s higher labor and energy costs and high logistics costs —
especially when trying to enter the Chinese market — as well as the fact that many buying offices
have moved out of Taiwan to Shanghai, making it more difficult for Taiwanese companies to sell
their products. The result is that only the most innovative and flexible companies producing the
highest-quality goods can survive in today’s market.

A Rieter representative (left) with Tai Yuen President Wei Kung Chi

Tai Yuen’s Strategic Approach In The Global Market

An alternative strategy to remain competitive in the marketplace is to enter niche markets.
In niche areas, lower volumes are not as interesting for mass-production mills, or those mills
cannot achieve the high quality standards typically required in those niches. Tai Yuen’s strategy
has been to enter into cooperation with top European designers, enabling it to offer customized
products. Tai Yuen uses Switzerland-based Rieter Textile Systems’ K 44 compact spinning technology
for many of its customized products. This strategy has required a reorganization of its global
sales approach in the form of closer and more intense sales contact with its customers in key
market areas.

On the other hand, Tai Yuen is moving its mass product manufacturing to South Africa. In
South Africa, labor and energy costs, in combination with trade agreements allowing tax-free access
to the US market, make this business feasible. This strategy also will be extended to mainland
China for mid- to high-quality yarns in order to also obtain access to this huge and rapidly
growing market.

To help the company enter niche markets, Tai Yuen Textile selected K 44 compact spinning
equipment from Rieter.

The Role Of Compact Spinning

Tai Yuen wanted to enter the niche market for the highest-quality, fine-count yarns, ranging
from Ne 40 to Ne 120, where consistency is of the utmost importance. After trials with various
compact systems, Tai Yuen came to the conclusion that Rieter’s K 44 spinning machine offered the
best quality and flexibility.

According to Wei Kung Chi, the company’s goal is to achieve quality standards equal to those
of Japan and the European Union. This means Tai Yuen needs complete machine reliability, including
consistency from one spindle to the next, because high-end users will not tolerate any quality

The first spinning results from the new machines are highly encouraging and have led Tai
Yuen to actively look for partnerships with apparel and garment manufacturers in the European Union
and the United States, where the highest-quality products are in demand.

Tai Yuen’s Competitive Edge

With the Rieter K 44 compact yarn spinning machine, Tai Yuen has the option to enter new
markets such as compact core, twin yarns and slub yarns. Tai Yuen is convinced its competitive
advantage lies not only in superior yarn qualities, but also in downstream processes where much can
be done to enhance fabric quality. The company’s research and development department is working on
many new products, which Tai Yuen hopes will provide it with an edge over its competitors.

In order to achieve its strategic goals, Tai Yuen will continue to transfer older machinery
to South Africa, where the greatest expansion will take place. Tai Yuen’s goal is to have 150,000
spindles at its facility in that country. The mill in Taiwan will successively be converted into a
high-end spinning operation specializing in niche areas such as fine yarns and specialty fabrics.

September/October 2006